Private sector credit surges as lower interest rates boost lending

Credit to Ghana’s private sector expanded sharply during the first half of 2026 as declining interest rates, improving macroeconomic stability and stronger banking sector liquidity encouraged commercial banks to increase lending to businesses and households.

Latest figures from the Bank of Ghana’s July 2026 Summary of Economic and Financial Data show that nominal private-sector credit grew by 41.2 percent year-on-year in June, up from 40.4 percent in May and 28.7 percent in April.

After adjusting for inflation, real private-sector credit increased by 34.1 percent, reflecting a broad-based recovery in lending activity.

Outstanding credit to the private sector reached GH¢119.6 billion at the end of June, compared with GH¢84.8 billion during the same period last year.

Real private-sector credit also increased significantly to GH¢44.2 billion, up from GH¢32.9 billion a year earlier.

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The expansion marks a strong turnaround after a period when elevated inflation, high lending rates and economic uncertainty constrained bank lending.

Private-sector credit strengthened consistently throughout the year, with nominal growth rising from 19.5 percent in January to 23.8 percent in March before accelerating sharply in the second quarter.

The recovery has coincided with a substantial decline in borrowing costs.

The average lending rate fell to 15.64 percent in June from 27.0 percent a year earlier, while the Ghana Reference Rate dropped to 10.02 percent from 23.8 percent over the same period.

Improved liquidity within the banking system has also enhanced banks’ capacity to extend credit.

Broad money and commercial bank deposits have continued to expand, supported by stronger deposit mobilisation, lower inflation and increased confidence in the financial system.

Although the Bank of Ghana has stepped up liquidity absorption through its 14-day bills to contain inflationary pressures, it has deliberately avoided withdrawing liquidity aggressively in order to preserve banks’ ability to finance the productive sectors of the economy.

Commercial banks continue to channel their growing liquidity into a mix of private-sector loans, government securities and Bank of Ghana bills, balancing profitability with prudent liquidity management.

Economists say the continued expansion in private-sector credit is an encouraging sign for Ghana’s economic recovery, as stronger lending is expected to support business investment, job creation and higher economic growth in the months ahead.